Pioneer Rivet Inc. $($PRI$)$ is a small machine shop that produces sheet metal products.

It had one line dedicated to the manufacture of light$-$duty vent hood shells, but

because of strong demand it is looking to add a second line. The new line would make

use of higher$-$capacity automated equipment but will consist of the same basic

processes as the current line. The new line is promised to reduce WIP by $25\%.$ The

current line was able to produce an average of $315$ parts per day in the past three

months. The new line is promised to average $500$ parts per day.

Current Line New Line

Process

Number

of

machines

per

station

Average

Time

$($minutes$)$

Standard

Deviation

of

process

time

Number

of

machines

per

station

Average

Time

Standard

Deviation

of

process

time

Punching $44110\mathrm{.}500\mathrm{.}1$

Braking $450\mathrm{.}7510\mathrm{.}500\mathrm{.}25$

Assembly $230\mathrm{.}2510\mathrm{.}480\mathrm{.}15$

Finishing $11\mathrm{.}20\mathrm{.}1510\mathrm{.}480\mathrm{.}1$

In the current line, the punching and braking stations are stopped for $6$ minutes every

hour for maintenance. The new line is very reliable and the machines need not be

stopped during the shift. Maintenance may be performed after the shift hours.

The current line costed the company $$5$ million, $5$ years ago and may be used for

another $2$ years, before the maintenance and other costs are so high that the line has

to be retired and replaced with an identical line. The new line is estimated to cost

$$7\mathrm{.}25$ million and would last $10$ years. The bank charges $7\mathrm{.}5\%$ interest on borrowed

money.

PRI has hired a consulting group to analyze the entire scenario to the extent possible

and provide an outlook for both the current and new line and provide

recommendations on whether it is a good idea to invest in the new line. PRI is also

open to recommendations involving improving their processes.

$1$ Adapted and modified from Factory Physics by Hopp and Spearman.

Data such as working hours in a day, number of days in a month, etc. may be assumed.

Arrival process and arrival process variability may also be assumed. However, these

assumptions should have a backing; we felt like it is not an acceptable reason for

making an assumption